SAN FRANCISCO — Elon Musk is set to take the stand in a high-stakes shareholder trial this Wednesday in San Francisco. The Tesla CEO faces accusations that his public statements misled investors and drove down Twitter’s stock before his $44 billion purchase of the platform in 2022.
The lawsuit, filed in October 2022 in the U.S. District Court for the Northern District of California, represents Twitter shareholders who sold their stock between May 13 and October 4, 2022—just weeks before Musk’s acquisition was finalized. It alleges Musk deliberately made false public statements to depress Twitter’s share price.
Musk initially agreed to buy Twitter in April 2022. However, on May 13, he announced the deal was “temporarily on hold,” citing the need to verify the number of spam and fake accounts on the platform. Twitter’s stock immediately dropped. Just days later, Musk tweeted that the deal “cannot go forward” and claimed nearly 20% of Twitter accounts were “fake,” according to the lawsuit.
The shareholders’ suit calls Musk’s May 13 tweet misleading because the buyout was not actually “temporarily on hold.” Twitter had not agreed to pause the deal, and nothing in the merger agreement allowed Musk to halt the acquisition.
Over the following weeks, Musk allegedly continued attempting to delay or back out of the deal, making statements that disparaged Twitter’s business and caused the company’s stock to tumble. By July 8, when Musk tweeted he was abandoning the deal over the “fake accounts” issue, Twitter’s stock had plunged to $36.81 per share—32% below Musk’s $54.20 offer.
“To try to renegotiate the price or delay the merger, Musk made materially false and misleading statements and omissions, and engaged in a scheme to deceive the market,” the lawsuit claims.
The issue of fake accounts wasn’t new for Twitter. In 2021, the company paid $809.5 million to settle claims that it overstated growth and user figures. The company had also regularly disclosed bot estimates to the SEC, while cautioning that the numbers might be underreported.
After months of legal battles, Musk offered to complete the acquisition for $44 billion on October 4, 2022, which Twitter accepted. The deal closed later that month. Since then, Musk has reshaped the company—slashing staff, dismantling the trust and safety team, rolling back content moderation policies, and rebranding Twitter as X in July 2023.
This isn’t Musk’s first courtroom appearance over investor claims. Three years ago, he spent eight hours testifying in a San Francisco federal trial over his 2018 proposal to take Tesla private at $420 per share. In that case, a nine-member jury cleared Musk of wrongdoing.
As Musk prepares to defend himself again, all eyes are on the San Francisco courtroom to see how this high-profile tech and finance saga unfolds.
